Sonos IPO - Yes or SoNo?

Sonos, on track to do 1 billion dollars of sales this year plans to list shares on the Nasdaq under the ticker symbol SONO.

With a reported net loss of $14.2 million on close to a billion dollars revenue ($992.5 million) is it a good time for the smart speaker company to be going Public?

Some people think No, with James Titcomb from the Telegraph making a point that the smart speaker space is being invaded by Amazon, Apple and Google. He has a point, If people are really interested in sound quality (And I mean really) then they won't be shopping for an all-in-one speaker/amp combo. They will have a proper set of stereo speakers and an amp (perhaps a Sonos amp) but Sonos have been moving away from this market and more towards smart speakers.

The trouble with smart speakers is that Amazon and Google are effectively using their smart speaker products as a loss leader to grab market share on data, search, advertising and purchasing. So not only are Sonos up against the biggest technology companies in the world, but those companies don't need to make a profit on their products, Sonos does.

Sonos currently makes a loss, but it has a great platform and a great product. They need to leverage the relationships they have with distributors (Best Buy sells 1 in 3 of the Sonos units sold in the USA). From their prospectus you can see that 61% of purchasers have more than one Sonos unit in their household with buyers on average buying a further 1.4 units. So customer loyalty is high but...

Sonos notes in regards to risks, customer dissatisfaction is a very clear and dangerous one if Sonos decides to stop supporting older versions of its products - furthermore they go on to say “that in the near to intermediate term, this backward compatibility will no longer be practical or cost-effective.”

Personally, for myself and many customers, Sonos shoot themselves in the foot if you cant use your older products anymore, or worse if they borked or bricked them with a forced firmware update. It's good that they note the danger of this, however the very fact they made the above statement shows that it's likely at some stage, silly and pointless IMHO and just the way to alienate your customer base - Lets see if the bean counters win that war.